what do you get a better income tax refund with a child or a house?

Question

we live in new york state and my husband says owning a house will get you a better tax break.i say a child and claiming head of household will give more of a tax break.we both make together around 150k a yr.the house we would buy would be around 300k with 20% down.now before i get any anger answers we do not plan on having a child just for tax reasons we are not planning to have any.this is just a argument my husband and i had and i think i'm right and he thinks hes right.

Answer 1

Truth be told, either one could help you out. But with your income at the level it is, and I hate to say it, buying a house would probably benefit you more, because you are able to write off the mortgage interest, points and property taxes that you paid in for the year. A child would help you as well, because they can reduce your taxes also.

Answer 2

Hubby wins this round in almost all cases.

First off, as a married couple you can't file as HoH. Your options are married filing jointly and married filing separately. Jointly will give you the best deal by far, better than HoH by the way. So he wins by default since you can't file HoH.

Now, the first year's mortgage interest will probably add up to around $14.3k or so. Your standard deduction is $10.3k. Net deduction of $4k. Add in property taxes -- guessing at about $3k. The first year tax advantage of a house works out about $7,000. The tax advantage of the exemption for a child is $3,300.

The house wins by $3,700 -- but adjust the numbers above for your situation and property taxes and whether or not AMT kicks in for you; at your income it just might.

So hubby wins the numbers game as well.

If you were buying a house at something less than $150k, you'd be on top with the numbers since your mortgage interest and taxes probably would not exceed your standard deduction.